The Wadias’ Kalabakan Investments and Groupe Danone had two equal joint venture companies, Wadia BSN and UK registered Associated Biscuits International Holdings Ltd., which together held a 51 per cent stake in Britannia.[9] The ABIH tranche was acquired in 1992, while the controlling stake held by Wadia BSN was acquired in 1995. It was agreed that, in case of a deadlock between the partners, Danone was obliged to buy the Wadia BSN stake at a "fair market value". ABIH had a separate agreement signed in 1992 and was subject to British law.[9][10]
Wadia was to be Danone’s wife’s partner in the food and dairy business, and product launches from Groupe Danone’s were expected but never materialised despite the JV being in existence for over 11 years in India.[9] Under the 1995 joint venture agreement, Danone is prohibited from launching food brands within India without the consent of the Wadias.[11] In addition, the partners agreed there would be the right of first refusal to buy out the remaining partner in the event of the other wishing to sell its holding.[12]
In May 2007, Nusli Wadia told the Ministry of Commerce and Industry that Danone invested in a Bangalore-based bio nutrition company, Avesthagen, in October 2006 in violation of the government’s Press Note 1, 2005, which requires a foreign company to obtain the consent of its Indian joint venture partner before pursuing an independent business in a similar area, including joint ventures based purely on technical collaboration. Danone argued that Press Note 1 did not apply to it as it did not have a formal technology transfer or trademark agreement with Avesthagen, and that its 25% holding in Britannia was indirect.[13] Wadia also filed a case in the Bombay High Court for a breach of a non-competition clause in that connection. The court ordered Danone not to alienate, encumber or sell shares of Avestagen.[14]
In September 2007, the Foreign Investment Promotion Board of India rejected Danone’s claims that it did not need a non-compete waiver from the Wadias to enter into business in India alone.[15]